TIACA works for the air cargo industry with the Director General acting as a CEO and the Board providing a connection to the industry. The Board of Directors is a diverse group of people, which will be welcoming new members as members move on so there are seven vacancies open for new members. The good news, says Chairman Steven Polmans is that TIACA has possibly the longest list of candidates to fill the seats with voting scheduled to take place in March.
Another major change for the Board is Sanjeev Gadhia, CEO of Astral Aviation, stepping down as Vice Chairman and staying on the Board. Polmans said, “From my side, a big thanks to Sanjeev, he was really instrumental supporting and helping during the transition and in the last four years building TIACA so I am very grateful for the work he has done. I am really happy that he continues as a Board member.”
In his place will be two co-Vice Chairs, Emir Pineda of Miami-Dade Aviation Department and Roos Bakker of Amsterdam Airport Schiphol. Pineda will be Treasurer and Bakker will be Secretary. Polmans will remain Chairman for another two year term, thanking the Board for re-electing him.
“When it comes to succession, we believe with two Vice Chairs there are bigger opportunities and an easier way to make sure we have replacements for the Chair over time. We also believe that three people on the executive team with the Director General, we have a group of four people so we are in a better position to take quick decisions and avoid decisions being made in too small a group of people so we always have sufficient backup and double signatures,” explained Polmans.
Representing the supply chain means TIACA needs to represent all industry sectors in its membership. Hughes reports that membership continues to grow with over 450 members with freight forwarders the largest group with almost 200 members. Airlines, airports, GSSAs and ground handlers are also well represented in the membership, and Hughes highlighted that the number of shippers is growing.
37% of members come from Europe, followed by 23% in North America. Membership from India and Africa is growing, said Hughes.
“Membership is growing in all regions and all industry sector types, which again is testament to the Board and the strategies they put in place and the execution of the association,” said Hughes, who also thanked the media, saying coverage helps the world know what TIACA is doing.
Priorities remain the same
TIACA’s priorities have not changed, they remain digitalisation, sustainability, partnerships and collaboration, safety and security, liberalisation and the value of air cargo. Bringing up safety and security, Hughes said the proliferation of smaller shippers in the e-commerce sector means TIACA needs to do more as an association and the industry needs to do more in making sure the community understands regulations to transport cargo safely and securely.
Liberalisation is another area of interest with globalisation and evolution of global supply chains. Not all markets are served by passenger aircraft so regulations must allow for smooth operations of freighter aircraft with Hughes saying TIACA is working with ICAO in this area.
Looking back on 2023, Hughes said geopolitical tensions continue to impact global supply chains, noting with sadness that the Russia-Ukraine war was approaching its second anniversary at the time of the call, which is adding cost, complexity and time to Europe-Asia trade.
For macroeconomics, inflation is coming under control but central banks remain cautious about lowering interest rates because they do not want inflation to flare up, which Hughes said impacted consumer activity. China’s GDP is recovering after coming out of lockdown and India is growing strongly with GDP forecast to have grown 7% last year.
E-commerce is one aspect that unites all markets and is anywhere between 15-20% of current volumes with the number of platforms growing. New platforms such as TikTok’s shop, Temu and others have sprung up quickly, reporting billions of dollars of sales a month.
Belly capacity recovered in 2023, ending the year at pre-Covid levels or above 2019 on certain routes. Coupled with freighter capacity added during the pandemic, capacity is high in certain markets, which is putting pressure on yields. Yields picked up at the end of the year due to maritime freight disruption in the Red Sea, which Hughes said is a shame because supply chain disruption is not good.
TIACA members expect the Red Sea disruption to continue for the next few months as maritime operators adjust to longer sailing around the Cape of Good Hope. This has taken out around 6% of maritime capacity and added 10-14 days to sailing time, causing a large increase in the cost per TEU.
Hughes commented, “This means the difference between air and ocean has narrowed. When we see that difference narrow, we see a positive impact on air cargo, particularly as there is a consequential impact which is a lack of containers because containers are taking three to four weeks, if not longer, to get back to points of origin.”
This disruption makes air cargo more attractive, which was seen in the run up to Chinese New Year. Drought conditions impacting the Panama Canal have been affecting maritime freight since the middle of last year. Normally, there are around 36 sailings a day through the Panama Canal, which was reduced to 24 in December.
Rain in December means restrictions have been lifted, which is good because it could have been reduced to 18 or 20 sailings a day. When the rainy season starts around April or May, water levels should get back to normal. The Panama Canal is having less of an impact on air cargo because there has been a shift to US West coast ports then using other modes of transport.
Central banks may start reducing interest rates in the second half of the year, which will be welcomed by consumers. There are high levels of inventory so it will take time for supply chains to be impacted by restocking with the effects expected in the second half of the year.
Discussions with TIACA members suggest they will look at retiring aircraft this year and take delivery of new units though production aircraft are being affected by supply chain issues.
Certain sectors will grow with e-commerce continuing to expand at double-digit rates. The high-tech sector has been more subdued with smartphone sales significantly down, so that is anticipated to rebound in the second half of the year.
Ultra fast fashion is accelerating volume and tonnage with Shein getting name-checked for helping double-digit growth. Pharmaceuticals and perishables are expected to grow with solid numbers with Valentine’s Day breaking records for the number of flowers being flown.
This year the drop in yields is expected to stabilise and the air cargo market is expected to post moderate growth. Friendshoring and protectionism are risks depending on what happens in what Hughes called the election mega-year with more than 50% of the global population going to the polls. The US Presidential elections is the one with potentially the largest impact on the rest of the world.
In 2024, around 100 million people will join the consumer class, of which over 30 million of them in India, around 30 million in China and 25 million in the rest of Asia.
They will mostly be young and tech-savvy, which is promising for e-commerce with Hughes commenting, “I think most of these were born with smartphones in their hands. Certainly I know from my two they find it impossible to put them down which means at some point, probably most days, they will be ordering something, which bodes well for the future of air cargo as a key driver for e-commerce movement.”
Going global
An important aim for TIACA is to be a truly global organisation, which it is doing with regional events. The first regional events were held last year in India and Africa. The year ended with the most successful Executive Summit on record with over 300 delegates.
In 2024, regional events will make a return with the first one held from 6-8 March in Sao Paulo, Brazil, a week before the IATA World Cargo Symposium in Hong Kong.
Hughes said, “We are looking forward to having a great degree of engagement and are working closely with a number of associations and organisations in Latin America to see if we can bring our global influence to tackle some of the very specific regional challenges.”
TIACA will hold its first Central Asian event from 19-21 June in Astana, Kazakhstan, which has received ministerial and presidential support as they want to turn Kazakhstan into an air cargo hub having established the country as an important rail cargo hub.
The Air Cargo Forum will be returning from 11-14 November in Miami and build on the success of the 2022 event, which was the first one held in its new permanent home in Miami. TIACA has event and facility management partners and this year’s event will have social functions, golf and destination packages and customer appreciation days to turn it into an experience, not just an event.
Partners in success
TIACA is working with other organisations to help enhance aviation and air cargo. TIACA is working with Airports Council International (ACI) at global skills programmes and there are partnerships with global associations such as IATA, ICAO and FIATA, and with specialists such as the Global Express Association, ALTA, ACAAI, ACFI and AFRAA. With FIATA, TIACA is looking at supply chain resilience, TIACA is working with IATA on sustainability and it is bringing global perspectives to regional associations such as ALTA and AFRAA.
In 2023, TIACA signed MoUs with ALTA, ACFI and AFRAA, and is working on an official agreement with ACI. With regional associations, it is mutual recognition so their members move forward with air cargo activity.
Hughes said, “It is very encouraging to note that a lot of organisations are approaching us to see how we can work closely with them, which I think is a testament to the strategies that the board has put in place.”
Having a global member base means TIACA can speak with a united voice. Priorities remain developing the next generation, liberalisation, safety, digitalisation, sustainability, sustainable aviation fuel (SAF), infrastructure and facility improvements, simplified and less onerous taxation and spreading the word about the value of air cargo.
Sustainable future
TIACA launched the BlueSky Sustainability Verification Program 18 months ago, an independent sustainability verification program where companies submit information, which is assessed to see where they stand.
They will receive a personalised dashboard highlighting where they are doing well and where they can improve. Feedback has been positive, said Hughes, and it has been embraced by several leading companies from across the industry.
The sustainability priorities are broken down into environment, society and culture and leadership. Under environment, the parts are decarbonisation, eliminating waste and protecting biodiversity. Society covers supporting local economies and communities, and improving lives and well-being. Culture and leadership covers improving efficiency and profitability, attracting, retaining and developing employees, and building and nurturing partnerships is the final point.
The 4th Air Cargo Sustainability Report has also been released, prepared by Change Horizon. There were 280 respondents, of which 110 were from the core group of airlines, airports and ground handlers. Respondents said they were under increasing pressure to be more sustainable, particularly for larger companies.
80% said sustainability was important for their customers and 73% said it was important for their employees. An interesting number was 37% reported it was important for regulators in the first report in 2021, which had risen to 61% in the most recent report. The importance for shareholders dropped from 60% last year to 54%, which puzzled Hughes who did not have an answer, speculating that it had been covered by everyone else before it gets to shareholders.
It was encouraging to see 71% of companies had a sustainability strategy with differences noted by company size. 92% of large companies have a strategy but this falls to 56% for medium sized companies and 46% for small companies.
Hughes said, “It’s not surprising when you consider smaller organisations have fewer staff so it is more difficult to dedicated somebody in this area. It is something we as an association are going to have to provide support in because it is important for everyone to make sure as the industry users demand things, that all segments can respond.”
Sustainability reports are becoming more common with 45% of respondents saying they produce a report. This varied from 70% of large companies to 21% of medium sized companies and only 17% of small companies. This was a major reason for TIACA launching the BlueSky program to help smaller companies assess their performance.
When companies were asked about the top areas for reducing their carbon footprint, reducing energy consumption, fleet modernisation and optimisation were the top responses. SAF and cleaner energy is increasingly important and there is a greater focus on reducing the weight of assets.
For fleet modernisation, 100% of ground handlers said they were renewing their GSE fleet and 91% of airlines were upgrading their aircraft. 71% of airports said they were investing in more energy efficient cargo facilities was highlighted for making buildings greener.
Airlines and airports are focusing most heavily on SAF with 76% of the former and 51% of the latter saying they are taking action. Across all categories, 35% of participants said they were actively involved in deploying SAF, which varied from 58% of large companies, falling to 19% of medium sized companies and only 2% of small companies.
Not surprisingly, innovation and digitalisation are driving modernisation efforts with 77% of respondents saying they actively promote and invest in innovation. Figures were good for all sized companies at 88% for large companies, 71% of medium sized companies and 62% of small companies.
Hughes was pleased to note that investing in talent is increasingly important with 79% of respondents saying they were investing in training and education, 76% said they were investing in improving the employee experience, and 70% were investing in advancing diversity and inclusivity.
He said, “This is crucial for an industry that employs so many millions around the planet, to make sure we continue to have access to that next generation of workforce.”